GST authorities issues RS 21,000 Cr show cause notice to Gameskraft
- ByStartupStory | September 26, 2022
According to reports, the GST Intelligence unit has sent a show cause notice to Gameskraft Technology (GTPL), an online gaming startup based in Bengaluru, in what appears to be the largest such notice in the history of indirect taxation.
According to the newspaper, the notification is related to the company’s failure to pay GST totalling Rs 21,000 crore.
The promotion of online betting through card, casual, and fantasy games such as Rummy Culture, Gamezy, Rummy Time, etc. has also been charged against Gameskraft Technology. It was also discovered that Gameskraft was not sending its clients any invoices.
According to the allegation, 28 per cent in taxes have been levied by GST inspectors on bets totalling about Rs 77,000 crore. The tax authorities stated that “GTPL was engaged in betting by permitting its players/gamers to place bets in the form of money stakes on the outcome of card games played online.”
The gaming platform submitted fake or backdated invoices during the investigation, which were discovered by forensic examination, according to the report. It also stated that the company was encouraging its customers to bet because there was no way to get their money back once it had been added to their wallets. The time frame covered by the show cause notice is from 2017 to June 30, 2022. Later, in relation to the show-cause notice, Gameskraft released a statement.
“As a responsible company with Unicorn status in the online skill game market, we have paid off our GST and income tax debts in accordance with long-standing industry custom. Since the authorities have sought to apply the 28% tax applicable to games of chance and lotteries rather than the 18% applicable to online platforms of games of skill, we are confident that we will be able to respond to this notice to the complete satisfaction of the authorities “a spokesperson for the company stated.
“The Supreme Court and numerous High Courts around the nation have ruled that playing games of skill are a constitutionally protected activity. One such game that is marketed as a skill game, similar to horse racing, bridge, and fantasy games, is rummy. As a result, the notification deviates from long-standing national law “said the spokeswoman.
According to records obtained by Zapkey.com, Moneycontrol had previously revealed that Gameskraft Technologies had purchased five residences in the city for about Rs 32 crore.
The sale agreement was filed on August 26, 2021. The five apartments, which are each 6,950 square feet (super built-up area) in size and are valued at Rs 31.49 crore, are part of the Savyasachi Sarayu project on First Main Road, Jayamahal Extension, Bengaluru.
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